HOSHIIRYO-SANKI CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥7.37B
• Operating Income: ¥863M
• Net Income: ¥634M
• EPS: ¥199.22

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

H1 FY2026 (Q2 cumulative) shows modest top-line expansion with slight profit compression for Hoshi Iryo Sanki. Revenue rose 1.2% YoY to ¥7,372m, while operating income declined 1.9% YoY to ¥863m, indicating mild margin pressure despite a still-solid gross margin near 50%. Net income was broadly flat (-0.1% YoY) at ¥622m, supporting a net margin of 8.44%, which is healthy for a defensive healthcare-supply model. DuPont-derived ROE stands at 3.20% on the half-year basis, reflecting low asset turnover (0.29x) and conservative leverage (1.30x), consistent with a balance sheet-first capital structure. EBITDA of ¥1,270m (17.2% margin) and a very high EBIT interest coverage (~437x) underscore operating resilience and minimal financial risk. Operating cash flow was robust at ¥976m, exceeding net income (OCF/NI = 1.57x), signaling good earnings quality. Liquidity is very strong, with a 316.8% current ratio and ample working capital of ¥9,432m, while solvency appears conservative with total liabilities at only ~0.30x equity. Based on total equity and assets provided, the implied equity ratio is approximately 76.7%, despite a reported 0% placeholder (unreported). Investing and cash balances are shown as zero or unreported, limiting free cash flow and cash buffer assessment; given the asset-intensive nature of medical equipment/oxygen-related businesses, capex is likely non-trivial despite the lack of disclosure here. The small delta between ordinary and operating income suggests modest non-operating gains or financial income, with negligible interest burden. The near-flat profitability YoY suggests cost headwinds or mix effects offsetting revenue growth; depreciation is meaningful (¥407m), indicating ongoing asset renewal requirements. Dividend figures are not disclosed; payout and FCF coverage metrics are therefore not inferable this period. Overall, the company appears financially conservative with solid cash generation, but growth is subdued and returns are constrained by low asset turnover. Key watchpoints include capex intensity, reimbursement/price dynamics in Japan, and the sustainability of current margins against input cost and wage pressures. Data limitations (notably zero entries for cash, investing CF, and dividend data) require caution when interpreting FCF and equity ratio metrics.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 8.44%
• asset_turnover: 0.290x
• financial_leverage: 1.30x (Assets/Equity ≈ 25,389/19,466)
• calculated_ROE: 3.20% (H1 basis; simple DuPont)
• context: Annualized ROE would be higher if H2 performance mirrors H1, but we reference the reported 3.20% for H1. margin_quality:
• gross_margin: ≈49.7% (Gross profit ¥3,667m on revenue ¥7,372m)
• operating_margin: ≈11.7% (¥863m/¥7,372m)
• ordinary_margin: ≈12.4% (¥917m/¥7,372m), aided by modest non-operating income
• net_margin: 8.44% (¥622m/¥7,372m)
• EBITDA_margin: 17.2% (¥1,270m/¥7,372m)
• commentary: High gross margin supports defensiveness, but slight YoY operating income decline suggests mild cost pressure or mix shift. operating_leverage: Revenue grew +1.2% YoY while operating income fell -1.9% YoY, implying negative operating leverage in H1 (costs grew slightly faster than sales). Depreciation is sizable (¥407m), indicating fixed-cost burden that can amplify leverage effects when growth slows.

Growth Assessment

revenue_sustainability: Low-single-digit growth (+1.2% YoY) points to stable but subdued demand, consistent with medical gases/home healthcare consumables. Sustainability hinges on hospital/homecare volumes and pricing under Japan’s reimbursement framework. profit_quality: Net income essentially flat (-0.1% YoY) with strong cash conversion (OCF/NI 1.57x) indicates underlying earnings quality is sound even as margins saw mild pressure. outlook: Absent segment detail, a mid-single-digit growth inflection appears unlikely near term; key drivers would be patient base expansion in homecare, installed equipment growth, and any successful price mix improvements. Margin trajectory will depend on input cost management and scale efficiencies in H2.

Financial Health

liquidity:

• current_ratio: 316.8%
• quick_ratio: 312.7%
• working_capital: ¥9,432m
• commentary: Very strong short-term liquidity; inventories are small relative to current assets. solvency_capital_structure:
• total_assets: ¥25,389m
• total_liabilities: ¥5,874m
• total_equity: ¥19,466m
• debt_to_equity: 0.30x (Total liabilities/Equity)
• equity_ratio_inferred: ≈76.7% (Equity/Assets), despite reported 0% placeholder
• interest_coverage: ≈437x (Operating income/Interest expense)
• commentary: Conservative balance sheet with low leverage and exceptional coverage minimizes financial risk.

Cash Flow Quality

earnings_quality: OCF of ¥976m vs NI of ¥622m (1.57x) is robust. NI + D&A (¥1,029m) vs OCF (¥976m) suggests modest working capital outflow or other non-cash/timing items (~¥53m). FCF_analysis: Investing CF is unreported (0 placeholder). Therefore, FCF cannot be reliably determined despite strong OCF. Given D&A of ¥407m in H1, maintenance capex is likely material in this asset-heavy model. working_capital: High current asset base and small inventories indicate receivables drive WC; monitoring collection days will be important. Working capital movements appear manageable in H1 given OCF strength.

Dividend Sustainability

payout_ratio_assessment: Dividend data (DPS, payout ratio) are unreported this period; the displayed 0.0% should not be interpreted as actual zero. FCF_coverage: Cannot assess due to missing investing cash flow and cash balance data; OCF alone appears sufficient to support dividends under typical payout levels, subject to capex needs. policy_outlook: With a conservative balance sheet and stable cash generation, the company has capacity for dividends; actual policy depends on capex and growth investments in home healthcare/medical equipment. More disclosure is required to judge sustainability.

Risk Assessment

Business Risks:

• Reimbursement and price revision risk in Japan impacting medical gas and homecare tariffs
• Volume normalization post-COVID reducing elevated demand in certain product lines
• Input cost inflation (electricity, logistics) pressuring margins
• Competitive pricing from larger industrial gas players and regional distributors
• Technological shifts in home healthcare devices requiring ongoing investment
• Regulatory compliance and quality/safety standards for medical gases and devices
• Customer concentration with hospitals/clinics affecting bargaining power

Financial Risks:

• Capex intensity for cylinders, concentrators, and rental fleets could constrain FCF in certain periods
• Receivables collection risk from healthcare providers affecting working capital
• Limited operating leverage at low growth rates, making margins sensitive to cost upticks
• Potential exposure to interest rate movements on any future borrowings, albeit current leverage is low

Key Concerns:

• Subdued growth (+1.2% YoY) alongside slight operating margin compression
• Incomplete disclosure on investing cash flows and cash balances, obscuring true FCF
• Dependence on regulated pricing and cost controls to maintain margins

Investment Implications

Key Takeaways:

• Defensive profitability: high gross margin (~50%) and healthy net margin (8.44%)
• Strong cash conversion: OCF/NI at 1.57x underscores quality of earnings
• Very conservative balance sheet: inferred equity ratio ~76.7%, D/E ~0.30x, coverage ~437x
• Growth moderation: operating income down (-1.9% YoY) despite small revenue increase (+1.2%)
• Capex/FCF visibility limited: investing CF unreported; D&A suggests ongoing asset needs

Metrics to Watch:

• Capex and detailed investing cash flows (to derive true FCF)
• Segment mix and pricing trends in medical gas vs homecare
• Operating margin trajectory and cost control in H2
• Receivables days and working capital intensity
• ROE progression (watch for improvements in asset turnover or margin)
• Dividend policy disclosures and payout intent

Relative Positioning: Within Japan’s medical gas/home healthcare ecosystem, the company appears smaller but financially conservative versus larger peers, with strong liquidity and low leverage but lower asset turnover limiting ROE.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis